An Indian Jurisprudential Analysis Of The Arbitrability Of Fraud In Commercial Disputes
- IJLLR Journal
- Aug 21
- 1 min read
Ipsa Mittal & Saesha Gehani, National Law Institute University, Bhopal
ABSTRACT
This paper studies the arbitrability of fraud in commercial disputes in India. Arbitration is designed to resolve conflicts efficiently while reducing court intervention. The Arbitration and Conciliation Act, 1996 supports this by limiting judicial interference and granting tribunals power over their own jurisdiction. However, the concept of “arbitrability” defines which disputes can be referred to arbitration, and fraud remains a contested category. Fraud, as defined under the Indian Contract Act, 1872, includes deception, concealment, false assertions, and misleading acts. Jurisdictions differ on whether fraud can be arbitrated. India’s approach has evolved through case law, moving from the court-centric stance in N. Radhakrishnan to a more arbitration-friendly position in Avitel Post Studioz, subject to public interest considerations. The paper traces this evolution through key judgments such as Booz Allen, A. Ayyaswamy, Rashid Raza, and Vidya Droila. It examines distinctions between fraud in inducement, which allows the contract to stand, and fraud in factum, which negates the contract entirely. The analysis shows how these distinctions affect the tribunal’s jurisdiction. The study also compares Indian developments with international approaches, including the separability doctrine upheld in Prima Paint (US) and Fiona Trust (UK). These cases reflect a global trend towards allowing arbitration in fraud disputes unless the arbitration agreement itself is directly challenged. By examining statutory provisions, judicial reasoning, and comparative perspectives, the paper aims to clarify the boundaries of arbitrability in cases involving fraud. It highlights the current legal position in India and identifies gaps that still require resolution.
